The Cost of running a Koi Business.
I have been reading recently online about Dealers and the money they charge for their Koi. It’s always been a subject of interest to many people. Most people think Koi Dealers are millionaires because we bring in and sell expensive Koi. I wish this was the case.
I remember in the late 80’s and 90’s there was massive money to be made in Koi. Incredible really when I think back.
However, times have really changed when it comes to Koi.
I still see new dealers opening every Spring time and see they are convinced they will make millions, they will change the industry, they will be the biggest dealer ever. I also see them close at the end of the same year. The Koi industry is like no other as many Millionaires have found out over the last 25 years. They were not millionaires at the end of it…
Another business which is successful and many new Koi Dealers start already having another business which they think they can use that business model in a Koi business. Never works.
I will start by saying that Japan is not what you may think. It’s just like a hobbyist in the UK or anywhere else in the world, you look around for the Koi you want. You don’t just walk into a dealer and go “Kohaku please” and pay and take it home. You look on websites, social media, visit the dealer, follow them when in Japan.
Its similar for us in Japan, there are HUNDREDS of breeders in Japan, and very few sell High Class Koi. Many now cater for the wholesale market, consolidated boxes. Easy to sell by the truck load. Some breeders over the last 10 years have not culled as hard as previous years because for them, the wholesale market is plentiful. They can shift thousands upon thousands of Tosai/Nisai, in all varieties to dealers across the globe.
Dealers who actually visit Japan and have been doing for many years actually learn about Koi. We know how to find special Koi. We can look in a pond of 300 fish and decide within 20 seconds if we can pull a single box out of that pond. It’s a skill we have learnt by going to Japan many times. Sometimes we will walk into a breeder and look in a pond of 800 Koi, we ask the price, we work out our landed costs and we decide to buy. On the surface these Koi look superb, after 5 minutes of netting you then realise there are maybe 12 Koi you actually want to buy, out of the 800. It is not as easy as you may think. This is where experience comes into the buying, we need to pick the very best 12 Koi out of that pond. Only trips to Japan will give you this. Then we go to the next breeder and see if we can do the same…
The 12 Koi I picked will now be priced accordingly to the breeder, I have just cherry picked his best 12 (well I hope I have) so the price is now high. I could have probably bought 50 pieces from the same pond and paid the same as I would have for the 12. I just could not sell the other 38. I would say at least 6 of those 12 I don’t even personally like, but it is not me who is taking the Koi home to my pond to look at. We have to look for Koi to suit our clients. As a dealer in Japan we look for the quality in that Koi, the skin, the pattern and most importantly the longevity, that also comes with experience. We know and learn the traits of certain breeders Koi, we have some idea how that Koi will develop.
Don’t get me all wrong though, on some occasions I have managed to find some beautiful Koi and great prices. When this happens and it does not happen often, it’s one of the best feelings in the world. I get a buzz in my stomach and get all excited. I remember doing it at Igarashi Kazuto about 5 years ago. He knew I was in the infant stage of my new business and I have known his for many years previous, so yes, he was doing me a very good deal. I picked his Jumbo Tosai before he had selected. He said to me before hand, “I will check the Koi you pick and I will keep the ones I want to keep” so I knew before I started. I had an American client with me at the time who also helped me select. There was a Showa… a VERY special Showa… I had picked it and placed it into my bowl, Kazuto came over and said “Sorry Tim San, if you want this Koi then the price is 300,000Yen, about £2000.00 at the time, I said No. Not because the Koi was not worth the price tag, it was. I just could not sell the Koi and make any profit, it was a Tosai, around 35cm. I remember my American client saying, “That’s out of order!!” I think I bought 40 pieces and one of the very few times I made good money, they were not over inflated prices when I sold them, they were still good prices compared to other Jumbo Tosai I saw at other dealer’s places but I did well. I was very happy.
The following October I visited Kazuto and he called me down to the bottom Koi house in Yamakoshi village. He bowled up the very same Showa, it was beautiful. I said, “Still 300,000Yen” and he said no “3,000,000Yen now” and laughed. I didn’t have the £2000 in the Spring to buy the Koi, I just could not afford it. I should have bought it, and left it to grow! I just did not have that luxury and even today would not buy it.
I remember rushing back the following year and he had already made his selections… the Koi were good, but not the same.
I remember another trip around 4 years ago I visited another breeder and he had some stunning Tosai, I asked the price and he told me, I got a little excited in my stomach and ‘Went in’ I picked 12 VERY beautiful Jumbo Tosai, I was only allowed a single Box. I picked them in about 3 minutes and looked at him and said “Okay?’ he replied “Okay”
It was about 11am and I rushed back to the Hotel and uploaded the pictures and Video and sent them to my clients. By around 2 pm I had sold them all. I had made good money. I was VERY happy. My clients all paid for the Koi the same day I think, they were as excited as I was, real gems.
2 days before the shipment I had a call from the breeder explaining he had a bacterial issue (He showed me pictures) and he would send other Koi to replace the Koi I had picked.
Of course, the replacement Koi were nowhere near the quality of the ones I picked… I had to refund every single customer. Now when I am in Japan, I sell a Koi, I buy more Koi knowing I have those funds. This almost crippled us, we were still a fairly new business, it was a DISASTER. If there was any profit made on the trip, it had just gone minus profit in the space of 2 minutes. I think at the time we had only shipped in 25 boxes and that 1 box could have closed us down! The climate in the UK was terrible at the time.
I also remember a trip probably around 2006/7 and I was with the late great Ray Jordan from Texas. Just the 2 of us. At about 5am I got a call in the hotel room and it was from Sakai San, Yamamatsu Koi farm. They had built a new house after the Earthquake and he begged me to drive up straight away to see the Nisai they had just brought in. We shot up there and saw some of the best Nisai I have ever seen, even now they would be among the very best. He bowled them and myself and Ray stood over with our mouths wide open. I said “Thank you, now how much???” I assumed he wanted me to go so I could buy, I was already excited to sell them! Would have been unreal! He then just said “Oh, sorry Tim San, not for sale, just wanted to show you them”
He was just wanting to show off what he had produced.
A good dealer can instantly tell what he can and what he cannot sell. His customer base is his business, he knows exactly what his clients are looking for.
I go around breeders selecting Koi for sale and each time I see a Koi, in my head I think “That Showa is for John, this Sanke is for Steve” and 9 times out of 10 John and Steve buy those Koi. We know our customers, and make it our business to get to know new ones.
Japan can be a VERY frustrating place. You have to search and search to find the best Koi. As a dealer, like a hobbyist we are on a tight budget too. We cannot just go and say that’s a lovely £5000 Showa, I’ll buy that for the shop! We have to find individual Koi, that we think will sell. That individual Koi has to make us a profit (I know that’s a filthy word to some)
We run business’s and we have to make money. However, with the amount of Dealers now in the UK and Europe we have to make sure we are competitive. So, to sell our Koi and hopefully make some money, we need to not only find a quality Koi, we have to find that quality Koi at the right price for us, and our clients. It’s a VERY difficult task. The actual selecting of the Koi is key. We need to be able to find the gems mixed in with so many general grade Koi. We cannot just go the breeders top pond and say, “Yeah 10 of those”
So, credit to the dealers who can do this. It takes YEARS to be able to select Koi. It’s not at all easy.
Quality Nishikigoi like all dealers rely on return business. Which makes picking Koi in Japan even harder. I can go to cheaper breeders and pick Koi that I know will look nice for 6 months. I can sell them at good profit too. I will only sell that customer it one time though, not good enough.
I saw someone say that Dealers buy a Koi for £50 and sell it for over £250? Well I don’t know many Koi that are actually worth £250 that can be bought in Japan at £50. Is that £50 landed to the UK? I don’t know.
It does not happen though. Not a Nisai anyway. Tosai? Possible.
A Nisai is generally around 40-50cm, that’s 4 in a box maximum, so the freight alone is more than £50 each.
Tosai you can actually make a decent profit. However, for every good Tosai you also buy general grade Tosai. No breeder will let you pick his best stuff and leave the general stuff. In a box of 30 Tosai you have paid a small amount for, I would say 5 pieces will sell straight away for the price you want. Another 10 will sell for a profit too. The other 15 will go in our Tosai ponds and I will be lucky to break even, so the initial 5 have to be very good.
Someone said “The Koi have gone up in Japan due to Asian countries”
Yes, I agree with that but they are buying from the ‘Big Name’ breeders which there are a handful. They can sell at the price so why shouldn’t they? I used to get annoyed with certain breeders who I knew when they had a single pond, and were desperate to sell Koi. The same breeders now have 5 Koi houses and I cannot afford to buy from them anymore.
The rest of the breeders, the lesser known ‘Big names’ still have very good Koi at reasonable prices. The customer wants a big brand name, like in any other industry, you have to pay for that big name brand even though there are other makes at MUCH better value. At the end of the day, at a Koi show the Koi is not judged on the breeder, its judged on the Koi.
I also saw someone say, “The dealers make very little on the expensive Koi” this is very true in the modern day. We have sold some very expensive Koi over the last 3 years, some 85cm Monster Go-Sanke. I would rather sell 20 x £65 Tosai at the shop. I make more money.
You probably all know the costs but here is a rough Japan spend for a Dealer. Many stay for 3 or 4 days so not to bad, I stay in Japan for over 5/6 weeks a year.
Flights in a year – £2100.00
Hotels in a year – £2500.00
Trains in a year – £1200.00
Car Hire in a year – £2200.00
Food and drink – £1600.00
Total £9600 Just to get and stay in Japan.
So now, I have to find a good quality Koi that my customer likes, then I have to factor in the expenses on the Trip, then the freight, then the other shipment costs, trucks down to Heathrow and the list goes on. Not even looking at the running costs at our facility.
There is so much more to our business than meets the eye. We run our business trip to trip, season to season. The money we make from our Spring shipments has to be enough to pay for our Autumn shipments. The Autumn shipments have to take us through Winter and leave enough to start the cycle again.
I don’t think any dealer does things differently.
We have built a very nice facility at Quality Nishikigoi, is it the best facility? No, it isn’t. It’s perfect for what we need though. We built it over many years and only built when we could afford to build.
We have now got a business. With that comes accountants, book keepers, invoices coming through every single day, VAT, Electric, Water and wages. The list can go on and on.
A quick example of running the shop…
When we sell our last UV and then get annoyed because now we have to buy 20 more in one go, just to get a small discount which is a big difference on dry goods!!
I am not trying to give a “woe is me’ story because I would not do anything else. If I wanted to be a rich man I would simply stop going to Japan. I would find Koi from the many other countries who breed low quality but VERY saleable Koi, and turn the current facility into a garden pond store. I promise you this, I would trade my Tansit connect van in for a supercar!
I don’t want that though. I visit Japan, one of the greatest countries in the world, I see the VERY best Koi on the planet and I love what I do.
We opened in 2009 so we have been going 9 years in April I think. It has worked. However it can all end as easy as it takes for a new dealer to start.